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COMMODITY INSIGHT
152 Ennis Lake Road, Ennis, Montana
(November 9, 1997) SOYBEANS: Soybean prices ended the week 48 cents a bushel higher while corn prices were up a bit over 4 cents a bushel. Wheat prices, on the other hand, had a sloppy five days with nearby futures closing the week at a 3 cent per bushel loss. It was a great week for beans, a nice week for corn and bummer for wheat.
Soybean prices continue to be supported by record large demand while wheat prices are being pressured by very poor demand. Thursday's exports for example, were the smallest of the marketing year for wheat. While for soybeans demand is near an all-time high. Demand for beans is simply huge.
It does seem however, that Mother Nature is now in a position to determine prices. Late this past week for instance, the news wires were rampant with stories of El Nino and the fact that it is now finally taking its toll on grain crops across the globe. In Brazil, portions of the country are experiencing record flooding just as planting time has arrived. Floods are of record size and acreage losses seem guaranteed. In other portions of Brazil, the weather is too hot and dry. Such a diverse weather pattern is typical of El Nino in that part of the world.
In addition, the South African maize crop is being stressed by hot and dry weather while 15% to 20% of the U.S. corn crop remains unharvested due to wet and cold conditions. Mother Nature is up to her old tricks.
The point here is obvious. This is an El Nino year. Since this El Nino is the most potent in over 100 years, buying the breaks in grains makes more sense than selling rallies. That includes wheat as well.
Jerry F. Welch
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